Lucy has worked for bp since 1998 in Australia, the US, UK, Europe and Singapore. In January 2021 Lucy was appointed to the position of vice president of regions, cities and solutions, Asia Pacific – a division of bp focused on providing integrated and decarbonized energy solutions to corporations, cities, regions and bp’s own businesses in support of bp’s net zero commitments. This speech was delivered at the Australian Energy Week Conference in Melbourne.
Good afternoon, everyone.
I’d like to start by paying my respects to the traditional owners of the land we meet on today - the Wurundjeri people of the Kulin nation and acknowledge their continued connection to country. I would also like to acknowledge all Aboriginal and Torres Strait Islander people present here today.
As we head towards a referendum later this year to progress the Uluru Statement from the Heart, let me affirm bp Australia’s support for constitutional recognition of Aboriginal and Torres Strait Islander peoples. Enshrining an Indigenous Voice to Parliament moves us further down the path of reconciliation and a step towards a more equitable Australia.
I’m Lucy Nation and I lead bp’s hydrogen business in Australia and Asia Pacific.
It’s wonderful to be here with you for Australian Energy Week this afternoon and to hear the collective commitment to solve one of the great challenges of our time - the delivery of secure, affordable and sustainable energy, today and into the future.
This afternoon, I want to speak about what we need to be doing - right now - to lay the foundations for an Australian hydrogen industry that can sustain and enrich the country – as other energy industries have in the past.
The fact is that Australia is at the precipice of a profound opportunity to seed the next major energy industry that will underpin a low carbon economy. And crucially, Australia has all of the ingredients to take advantage of that opportunity;
Australia has a long and successful history of exporting energy. It has underpinned our prosperity and sustained a legacy of industry and innovation. As bp’s CEO has said – ‘On the doorstep of Asia - Australia has the best postcode!’
At bp, we’re excited by the potential in Australia to be a major green energy producer and, a green energy exporter. We believe that there is an opportunity to not only produce domestic energy at globally competitive costs, but to allow Australia to become an advantaged manufacturing location due to local green energy pricing competitiveness. By combining the renewable energy and resources that we have in abundance here, we can expand the breadth of high value, low carbon products available for export and have tangible impacts on decarbonisation both domestically and globally.
Australia is a critical market for bp, which is why we are matching the immense opportunity here with our own ambitious plans to help new and existing customers to decarbonise. Our investment plans in hydrogen recognise domestic needs, as well as major international demand in Asia and Europe. But, alongside our Australian hydrogen plans sit significant investment in EV charging, bioenergy, renewable power production, and continued investment in offshore gas in Western Australia. We believe, as others have highlighted at this conference, gas will continue to play a key role in the energy transition. At bp, we’re focused on reducing the emissions associated with its production and use while developing low carbon energy alternatives at pace.
As the energy transition hastens, we must ensure we’re making the right investments in the energy industries of the future. This is important for a number of reasons:
We agree that in most cases, electrification is the most efficient way to decarbonise. However for the many decarbonisation challenges where electrification is not going to work, hydrogen and its derivatives will play an important role – be it as a feedstock for industrial or chemical processes, a method for storing and transporting energy, or helping to lower carbon emissions for heavy haul trucks that must travel long distances.
bp is progressing three world-scale green hydrogen projects in Western Australia where we have access to abundant renewable resources in close proximity to sources of demand:
Initially, the plan for each project is to focus on supplying renewable power and hydrogen to local markets contributing to decarbonising Australia, before scaling up and exporting to international markets and continuing to be a supplier of choice for important global partners. It’s a strategy bp is applying around the world for our hydrogen projects; starting with a focus on local supply, then regional and global. The capacity to meet domestic energy needs, coupled with the international reach to service major trade partners, is an important element that bp brings to the table.
To make the Hydrogen industry a success, we’re going to need large scale, cost competitive projects. Doing so means we can’t afford to treat it as a niche industry, it must become part of the broader energy system.
But let’s acknowledge what we’re all thinking – the road ahead certainly isn’t for the faint hearted.
Consider where we are, compared to gas – or more specifically, LNG. LNG is a product the world needs – it is clear who the customers are to purchase it, and on what terms, due to clear pricing indices. It is clear how they will ship it and what import locations and distribution infrastructure will be used.
It has mature supply chains to construct, operate and maintain facilities. It has established infrastructure to produce, liquify, ship and re-gasify.
But as with any nascent market – hydrogen is yet to attain all of these key attributes and faces many “chicken and egg” problems.
To name a few of the challenges we face today:
We can’t treat hydrogen projects like business as usual. They will require their sponsors to make incredibly big and bold decisions today. The challenges to simply finance these projects are very different to what we are used to when compared with projects for established forms of energy, like LNG. It’s certainly not business as usual. But we also have clear memories of the early days of the LNG industry which faced many of the key challenges that the nascent hydrogen industry does today. We have seen this before.
bp and Australia are not alone in facing this task. Governments and companies across the globe are all grappling with the issue of how to align supply and demand and how to keep the energy transition moving forward at pace.
For all of us, on Team Australia, if we want to stay in the green energy race it is a challenge we must lean into.
The world is inching closer to the precipice, as we near the Paris target to keep temperature rises to 1.5 degrees.
In Australia, we have seven short years to achieve our 43 percent emission reduction target, and consultation has commenced for the next tranche of emission reduction targets.
So this is not just an opportunity – it’s a necessity.
And staying in the race is about more than decarbonisation. It’s about maintaining our role as a reliable and successful energy provider in Australia and the region.
Given Australia’s economic and industrial profile, we need to be in the first wave of green hydrogen project developments to ensure we benefit from the tide of global capital, give confidence to our customers, and establish ourselves in the first tranche of 15 to 20 year overseas offtake deals.
If we give this role up – it will be very difficult to recoup while playing catchup.
Many different participants have a role to play:
We can get there using the established processes we are all familiar with – but as I’ve mentioned, this isn’t business as usual. While the clock is ticking, what’s needed is a coordinated effort – with all participants actively collaborating.
It’s a role we’re comfortable with. We’ve a track record working with governments and partners to service the needs of our customers across the globe.
Fortunately, there are green shoots of us working together to create Australia’s hydrogen industry. It’s no longer a question of ‘if’ – but rather ‘how’ and ‘when’?
Let me applaud just a couple of examples of recent steps:
Each of these signals provide confidence to energy companies and investment partners that there is genuine commitment to get the policy settings right, and set a foundation to realise Australia’s ambition to be a ‘green energy superpower’.
So what steps are needed for continued momentum? Firstly, we need to make the best use of the Hydrogen Headstart Program. While the details of the program are yet to be developed, we know it will encompass support for a small number of flagship projects. These flagship projects are paving the way for us all - they must be successful in order to give customers assurance of Australia’s commitment to this new industry.
So what should constitute a “flagship” project?
From bp’s perspective, there are some fundamental requirements.
bp’s global insights have also taught us that ‘how’ this is done is the critical part of the recipe. Beyond executing projects well and safely….
Support of flagship projects should be seen as an important bridge to close the commercial gap and catalyse a nascent industry.
As such – the last and most critical requirement should be for projects to demonstrate long-term commerciality without government support. They should be able to play to Australia’s strengths in abundant renewable energy combined with sound project execution and strong customer offtake.
At bp, we also recognise that the seeding of a viable Australian hydrogen industry requires more than short term government support.
Building such a transformative new industry is a huge challenge that will take new approaches to bring it to reality at the pace that’s needed. The Australian Hydrogen Industry will gain a reputation based on how we collectively deliver.
The ambitions for net zero are an enormous challenge for Australia and the world, it requires an energy transition of the size, scale and nature we’ve never seen - far greater than what our forebears witnessed in the industrial revolution. To date the world has only seen energy additions which are much easier to achieve than an energy transition.
Australia is going to have to play a very big role if the world is going to meet the Paris Climate Commitments and a large and competitive Australian hydrogen industry will be key.
At bp we’re ready to embrace it and play our part. We are working very hard - using all of the global skills we have at our disposal to bring 3 significant Australian hydrogen projects into reality – to contribute to creating a new industry that can be a source of national pride for not just decades but centuries to come.